@cool_kiwi
I recommend the following:
1) IF the 1099-INT has more boxes with $$ in them, along with the box 8 $$ in it, remove any $$ from box 8 (& box 13 if appropriate) that came from your own state's bonds, and create a new 1099-INT with just those $$ in box 8, and tag them as coming from your own state's bonds on that separate 1099-INT. IF a portion of those box 8 $$ came from other states, leave that portion in the original 1099-INT and tag it all as "Multiple States" (or "More than one state" if you are using desktop software.) ((((unless you live in Utah, then a couple other state's bond interest can be included with your own state)))).
2) could also try deleting that 1099-INT entirely, especially if it's data was imported originally. Then create a new one and put in all the $$ manually. (don't put in any 0.00 values in any boxes, leave them blank. )
3) Not sure where you are seeing Special Handling, but if it's where I think you are checking a box, that refers to $$ in box 1, not box 8.....so yes, your state may not be a part of that checkbox.
4) The $$ tagged as being from your state's bonds should not show up on your state forms anywhere....just the $$ from other states should be a state income addition.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
